Congress Passes the ABLE Act

This past fall, IABG partners advocated for the Achieving a Better Life Experience (ABLE) Act during a day on the Hill at the CFED Assets Learning Conference. Last week, Congress passed the ABLE Act and, in doing so, allowed individuals with disabilities and their families to build much-needed savings.

Millions of individuals with disabilities rely on public benefits for health care, food, housing, and income. Currently a means or asset test on Social Security Income (SSI), Social Security Disability Insurance (SSDI), and other programs prohibits benefits recipients from building savings over $2000. Essentially, to remain eligible for much needed benefits programs, an individual must remain poor and financially insecure.

The ABLE Act eases financial strains faced by young individuals with disabilities by allowing them to create tax-free savings accounts. Expected to be signed into law by President Obama shortly, the bill allow families to open accounts similar to 529 savings plans for college-bound kids. Money saved in these ABLE Accounts will not be counted against them when applying for federal benefits programs.

Who is Eligible for an ABLE Account?

ABLE Accounts are limited to individuals with an age of onset of disability before turning 26 years of age. If you meet this criteria and are also receiving benefits already under SSI and/or SSDI, you are automatically eligible to establish an ABLE account. If you are not a recipient of SSI and/or SSDI, but still meet the age of onset disability requirement, you would still be eligible to open an ABLE account if you meet SSI criteria regarding significant functional limitations.

How Much Money Can be Saved in an ABLE Account?

The total annual contributions by all participating individuals, including family and friends, are $14,000. The accounts can grow to up to $100,000 before they begin impacting an individual’s eligibility for SSI. Finally, the limits will be adjusted annually for inflation.

How Can the Funds be Used?

The funds in an ABLE Account can be used for any “qualified disability expense,” which means any expense required of the individual as a result of living a life with a disability. This includes education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services. Other eligible expenses will be further described in regulations to be developed in 2015 by the Treasury Department.

What are the Next Steps?

Each state is responsible for establishing and operating an ABLE program. After President Obama signs the ABLE Act into law, the Department of Treasury will begin to develop regulations that will guide the states. No accounts can be established until the regulations are finalized following a public comment period on proposed rules for program implementation. States will begin to accept applications to establish ABLE accounts before the end of 2015.

Questions about the ABLE Act: email Lucy Mullany, IABG Coordinator